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Data for today’s episode is provided by Mercator Advisory Group’s Blog – Subscription Economy Accelerates as Stay-At-Home Lifestyle Spurs Demand
The Subscription Economy Accelerates:
- While the ‘Services’ sector eclipsed 50% of non-farm payrolls in the US a half century ago, services now make up 70% of the 2020 economy
- The subscription economy makes up one of the fastest growing and largest sectors of the Services economy.
- Mercator estimates the 2020 U.S. subscriptions market to be $28.4 billion, a 66.1% increase over pre-pandemic 2019.
- Online subscriptions like streaming, software, media, and Amazon Prime are the largest projected gainers with YOY change estimated at +11.7% in 2021.
- This change in online subscriptions is estimated to INCREASE in 2022 to +15.2% YOY change.
- Box-of-month subscription services saw the largest Covid increase of 80% YOY change in 2020.
- However, box-of-month subscription services are estimated to return to around 2.5% YOY growth in 2021 and 2022.
The subscriptions economy has become a growth segment of the U.S. services economy. While subscriptions go back many years, it’s been the digitization of commerce and consumer purchase behavior that now drives the subscriptions market. Through 2022, online subscriptions will find higher growth due to continued consumer popularity of streaming services and software. Payments firms, including ISVs, merchant acquirers, and payment gateways, must understand the subscription management requirements of sellers and key trends that are driving market growth. A new research report from Mercator Advisory Group, Subscription Economy Accelerates as Stay-At-Home Lifestyle Spurs Demand, sizes up the U.S. online subscriptions market and its future direction.
“Video and music streaming has led the rapid growth of online subscription services for stay-at-home households during 2020. Online subscriptions have become a growth area within e-commerce and will continue in the foreseeable future. Bundled subscriptions prove to be a winning marketing strategy for the leading industry players such as Amazon and Apple and consumers have responded enthusiastically,” commented Raymond Pucci, Director, Merchant Services Practice at Mercator Advisory Group, the author of this report.